Who's the Smart Money Here?

The #coffeemarket has been consolidating for the last two weeks after its rapid rise up since the beginning of April. The question now is where to from here? And I think the price action for the last few days has been telling.

My suspicion is that #coffeeRoasters are using this opportunity to add to their longs now that we have come off of the highs. My logic is what I would describe as "contrary" morning price action.

For the last few days we have been seeing buying in the early morning hours brining the price up a little bit, and then sell-offs in the main part of the session. This combined with increased #OpenInterest on the down days, suggests to me that #Commercials adding longs and then #Specs are selling during the session.

This is purely "speculation" on my part at this point (that's a pun, see what I did there?). This could also be spec-on-spec trading here with late to the party bulls losing the battle with aggressive and emboldened bears, or it could also be #CoffeeExporters locking in sales while the price is still high.

I am skeptical of this last version because I have been hearing about very little physical #coffeetrading going on in origin, but as always, I'm open to being wrong there.

If the price action is indeed Roasters vs Spec Shorts as I suspect, that's not super bullish news. Roasters tend to be the #smartmoney and buy when #coffee prices are cheap. They only buy the highs at capitulation and that often signifies the end of the #rally. This combined with recent stories of rain, could mean further sell-offs.

However, the other side of the coin is that some #consolidation is good for the rally in the longer term. It makes the trend appear more sustainable as participants get used to the idea of higher prices--as commercials have clearly raised the levels of their GTC buy orders. Moreover, if we are bulding a short spec into the market that will ultimately be a source of #shortcovering.

If nearby support levels hold, then I believe that the market will interpret an increase in spec short positions as #bullish. "If" being the key word here, "if support levels hold"...